On July 24, 2025, BP announced its decision to exit the Australian Renewable Energy Hub (AREH), a high-profile green hydrogen project. Holding a 63.6% stake, the company informed partners InterContinental Energy and CWP Global that it will withdraw as both operator and equity holder. The project aimed to deploy up to 26 GW of solar and wind capacity to produce 1.6 million tonnes of green hydrogen annually, positioning it among the largest ventures of its kind globally.
Why now?
BP’s renewables arm has struggled to deliver strong results, prompting criticism from investors. In response, the company is scaling back its net-zero ambitions and redirecting financial focus toward traditional oil and gas investments.
Back in February 2025, BP signaled this shift by cutting more than £5 billion from its renewable energy budget and increasing oil and gas investment by roughly 20 percent, raising it to about $10 billion per year. CEO Murray Auchincloss described the move as a “fundamental reset,” aimed at satisfying activist investors and stakeholders focused on short-term returns.
Big hydrogen, big hurdles
AREH is not alone in facing setbacks. Around the world, major green hydrogen projects led by companies like Shell, Iberdrola, Equinor, Fortescue, and Total Eren have been delayed, downsized, or canceled. The reasons range from high production costs and weak demand to regulatory delays and infrastructure challenges.
In Australia, several ambitious hydrogen plans have been shelved or abandoned. Players like Origin, Trafigura, Woodside, the Queensland government, Fortescue, and now BP, have all found it difficult to match their ambitions with realistic execution.
Costs and demand are killing the momentum
Green hydrogen sounds promising, but the economics are still tough. Producing one kilogram typically costs between $8 and $11, far above alternatives like grey hydrogen and natural gas.
Without long-term purchase agreements or substantial subsidies, even large corporations are pulling back. At present, green hydrogen accounts for only 12 GW of operational capacity, well below the European Union’s target of 40 GW by 2030.
What now for AREH?
InterContinental Energy and CWP Global are not giving up yet. They are actively exploring ways to keep AREH alive without BP’s involvement. Although the project was originally intended to serve Asian export markets, a restructured plan could give it a second chance.
BP’s pivot: Climate credibility at risk?
BP had pledged to cut emissions by 35 percent by 2030 and had committed significant resources to renewables. Its decision to reduce its renewable footprint and double down on fossil fuels has sparked criticism. Some argue it damages the company’s credibility on climate and weakens broader efforts to reach global net-zero goals.
The bigger concern: as green hydrogen projects stall, can the world still treat hydrogen as a key piece of the net-zero puzzle?
Final thoughts
BP walking away from AREH closes a high-profile chapter in the green hydrogen story. For BP, it may be a necessary course correction for financial stability. For the energy transition, it’s a reminder that ambitious goals need solid business models to stand. Whether this becomes a broader trend among energy giants remains to be seen.
All eyes now turn to AREH’s remaining partners, and the future of hydrogen as a serious contender in the global clean energy race.
